BEVERLY ENTERPRISES, INC. v. HERMAN

March 26, 1999

BEVERLY ENTERPRISES, INC. AND BEVERLY HEALTH AND REHABILITATION SERVICES, INC., PLAINTIFFS,v.ALEXIS M. HERMAN, SECRETARY OF THE UNITED STATES DEPARTMENT OF LABOR, AND THE UNITED STATES DEPARTMENT OF LABOR, DEFENDANTS.

The opinion of the court was delivered by: Stanley S. Harris, District Judge.

OPINION

This matter is before the Court on defendants' motion to
dismiss, plaintiffs' response, defendants' reply, and both
parties' supplemental memoranda. Upon consideration of
plaintiffs' amended complaint and the relevant pleadings, the
Court grants defendants' motion in part and denies it in part.
"Findings of fact and conclusions of law are unnecessary on
decisions of motions under Rule 12 . . ." Fed.R.Civ.P. 52(a);
see also Summers v. Department of Justice, 140 F.3d 1077,
1079-80 (D.C.Cir. 1998). Nonetheless, the Court sets forth its
reasoning.

Although Congress generally delineated the attestation
requirements in the INRA itself, the statute further provided
that the DoL "shall . . . publish final regulations to carry out
section 212(m) [8 U.S.C. § 1182(m)] of the Immigration and
Nationality Act." Pub.L. No. 101-238, 103 Stat. 2099, 2102
(1989). In accordance with this provision, the DoL published
interim final regulations effective December 6, 1990, see 55
Fed.Reg. 50,500 (1990), and final regulations in January 1994.
See 59 Fed.Reg. 882, 897 (1994).

Beverly Enterprises, Inc., and Beverly Health and
Rehabilitation Services, Inc., (collectively "Beverly") own and
operate a large number of health care facilities that provide
long-term nursing care and rehabilitation services. In April
1995, the DoL began an investigation to determine whether
Beverly's employment practices were in violation of the INRA.
When Beverly asked what motivated the investigation,
investigators allegedly responded that it was a "routine audit,"
and specifically denied that it was in response to any complaint.
DoL investigators repeatedly required more information, which
Beverly provided, based on the belief that it was under a legal
obligation to do so. In February 1996, Beverly sought to confirm
that the investigation was not in response to a complaint, but
the investigators refused to confirm their earlier statement. In
May 1996, Beverly informed the DoL that unless and until the
agency stated whether there was a complaint, Beverly would not
provide the information requested. The DoL allegedly responded
that it did not need a complaint to conduct an investigation.
However, it stated that the DoL had received a complaint about
Beverly from the Department of State. The DoL allegedly refused
to confirm or deny the receipt of any complaint from a private
party.

After another attempt to ascertain whether the investigation
was undertaken in response to a complaint, Beverly refused to
participate further in the investigation. The DoL, however,
allegedly continued its investigation in secret, and in August of
1997 it contacted Beverly to present the results. The parties
were unable to agree on a date to meet, and Beverly did not hear
anything further from the DoL.

On October 22, 1997, Beverly filed a complaint in this Court.
On January 6, 1998, Beverly representatives met with DoL
officials. At that meeting, the DoL presented the information it
obtained as a result of its investigation and asked Beverly to
pay over $3.4 million in back wages covering the investigation
period, allegedly based on a failure to pay the appropriate
"prevailing wage" to either its H1A nurses or its citizen nurses.
Beverly then filed an amended complaint on January 21, 1998, in
fight of the new factual posture of the case. The amended
complaint alleges that the DoL violated the Administrative
Procedure Act ("APA") by: (1) promulgating various regulations
that are "in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right," 5 U.S.C.
§ 706(2)(C);*fn2 (2) investigating Beverly without a complaint
from an "aggrieved party" within the meaning of
8 U.S.C. § 1182(m)(2)(E)(ii); (3) interpreting "aggrieved party" to include
a government agency, namely, the Department of State; (4)
initiating an invalid investigation against Beverly; and (5)
conducting an investigation beyond the time limit specified in
the INRA.

STANDARD OF REVIEW

A motion to dismiss should not be granted "unless plaintiffs
can prove no set of facts in support of their claim which would
entitle them to relief." Kowal v. MCI Communications Corp.,
16 F.3d 1271, 1276 (D.C.Cir. 1994); Conley v. Gibson, 355 U.S. 41,
45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). To that end, the
complaint is construed liberally in the plaintiffs' favor, and
plaintiffs are given the benefit of all favorable inferences that
can be drawn from the facts alleged. EEOC v. St. Francis Xavier
Parochial Sch., 117 F.3d 621, 624 (D.C.Cir. 1997);
Tele-Communications of Key West, Inc. v. United States,
757 F.2d 1330, 1334-35 (D.C.Cir. 1985).

DISCUSSION

Defendants challenge Beverly's claims on several grounds. They
contend that all the claims should be dismissed because there has
been no final agency action, that they are not ripe for judicial
review, and that Beverly has failed to exhaust administrative
remedies. Furthermore, defendants contend that, to the extent
that Beverly brings a pre-enforcement challenge to DoL
regulations, that claim violates the statute of limitations and
is barred by laches.

I. Whether Beverly's Claims Implicate "Final Agency Action"

Under the APA, "[a]gency action made reviewable by statute and
final agency action for which there is no other adequate remedy
in a court are subject to judicial review." 5 U.S.C. § 704; see
also FTC v. Standard Oil Co., 449 U.S. 232, 238, 101 S.Ct. 488,
66 L.Ed.2d 416 (1980). "Final agency action" is a jurisdictional
prerequisite to judicial review.*fn3 See Hindes v. FDIC,
137 F.3d 148, 161 (3d Cir. 1998); Ukiah Valley Med. Ctr. v. FTC,
911 F.2d 261, 266 (9th Cir. 1990); Ticor Title Ins. Co. v. FTC,
814 F.2d 731, 745 (D.C.Cir. 1987) (Williams, J., concurring);
Independent Petroleum Ass'n of America v. Babbitt, 971 F. Supp. 19,
29 n. 5 (D.D.C. 1997). Defendants contend that there is no
final agency action in this case because Beverly filed its
complaint while the case was still in an investigative posture.
Moreover, although on March 13, 1998, the Wage and Hour
Administrator ("the Administrator") issued a written
determination that Beverly violated R4RA and DoL regulations,
defendants contend that, because Beverly appealed that decision
to an Administrative Law Judge ("ALJ") on March 28, 1998, that
cannot be final agency action.

The Supreme Court has made it clear that the "finality" element
of the APA should be interpreted "in a pragmatic way." Standard
Oil, 449 U.S. at 239, 101 S.Ct. 488; Abbott Laboratories v.
Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681
(1967). Factors relevant to the finality inquiry include: (1)
whether the action was a "definitive" statement of the agency's
position; (2) whether it had a direct and immediate effect on the
day-to-day business of the party affected; and (3) whether
analysis of the action is legal or factual in nature. See
Standard Oil, 449 U.S. at 239, 101 S.Ct. 488 (citing Abbott
Laboratories, 387 U.S. at 151-54, 87 S.Ct. 1507); Baker Hughes
Inc. v. Kirk, 921 F. Supp. 801, 806 (D.D.C. 1995); see also Her
Majesty the Queen in Right of Ontario v. EPA, 912 F.2d 1525,
1531 (D.C.Cir. 1990) ("The [finality] inquiry seeks to
distinguish a tentative agency position from the situation where
`the agency views its deliberative process as sufficiently final
to demand compliance with its announced position.'") (quoting
Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 436 (D.C.Cir. 1986)).

Count I of Beverly's complaint, which consists of a
pre-enforcement challenge to various DoL regulations, clearly
implicates final agency action. It is well-settled that the
promulgation and publication of a final regulation after formal
notice and comment is "final" agency action.*fn4 See Toilet
Goods Ass'n v. Gardner, 387 U.S. 158, 162, 87 S.Ct. 1520, 18
L.Ed.2d 697 (1967) [hereinafter Toilet Goods I]; Abbott
Laboratories, ...

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